The Q1 2014 Oil & Gas UK Business Sentiment Index has revealed that while the industry’s optimism has continued to decline, it remains positive, at six points above zero on the -50 to +50 index.
The index, which captures a snapshot of the industry mood and measures a number of economic indicators, including business confidence, activity levels, business revenue, investment and employment with a higher rating (above zero) indicating a more positive outlook and a lower rating (below zero) expressing a more negative opinion. Although the first index of this year still remains within positive territory overall, the decline continues the downward trend in optimism seen over the last four quarters.
The low levels of drilling, and cost pressures caused by increasing operating costs, the tight labour market, and changes to the industry’s fiscal environment may have contributed towards a dampening of optimism in the industry.
Oonagh Werngren, Oil & Gas UK’s operations director, commented: “Whilst the mood of the industry remains positive, those in the sector recognise there are underlying problems that need addressing. Namely, rising operating costs and a current decline in exploration. We were pleased to hear that there has been such a strong response to the latest licensing round issued by the Department of Energy – with 173 applications for 370 blocks – our focus now, must be on realising the potential of that new acreage and drilling of more exploration wells to recover the resources our country vitally needs.
“If the current rate of investment is sustained, we believe that there is real hope for the long term future of this industry as the UK Continental Shelf has the potential to secure up to a further 24 billion barrels of oil equivalent (boe), with our industry taking active steps to recover those resources beyond 2050.”